2/24/2010 @ 3:15AM

The Miracle Of Asia's Richest Man

Li Ka-shing was one of those hard-nosed entrepreneurs who capitalized on Hong Kong’s liberal economic regime and sparked the colony’s Miracle. By the time he and
Hasbro
‘s Alan Hassenfeld slurped noodles together, Li was laying the foundations of a fortune far greater than those of other local industrialists.

According to Forbes magazine, Li is the eleventh-richest man in the world, with a net worth estimated at $26.5 billion. [Editor's Note: As of February 2010, Li's net worth was $23.1 billion.] He did not get that rich off G.I. Joe plastic heads. Li was savvy enough to bet the money he had made in plastics on the future of the Hong Kong economy, mainly through timely purchases of local property and other assets, before expanding internationally.

Today Li’s chief company, conglomerate
Hutchison Whampoa
, controls advanced mobile phone networks in Europe and Asia and operates more ports around the world than any other company.

At home in Hong Kong, Li is omnipresent. He owns supermarkets, drugstores, and wine shops; builds apartments; and operates the local power utility. The companies under his control command about 15 percent of the capitalization of the Hong Kong stock market. An associate once commented that Li is so powerful in Hong Kong that “he can almost rewrite history.”

Along the way, Li developed a reputation for possessing a magical ability to find the perfect deal. Journalist Louis Kraar wrote in Fortune that Li “combines the instincts of a gambler with the calculations of an actuary.” The locals nicknamed him “Superman.”

Yet like many other Chinese tycoons, Li tries to maintain a relatively modest lifestyle, at least in public. He shares a two-story home in Hong Kong with his elder son, Victor. Li has one floor to himself, while Victor, his wife, and three daughters reside on the other.

When Kraar met him in the early 1990s, Li was clad in the standard dark business suit and plain tie of the Asian manager. He pointed out that his Citizen electronic wristwatch cost only $50. Kraar thought Li looked “like an amiable, intelligent bank clerk.”

He expounds a business philosophy that is equally simple. “If you keep a good reputation, work hard, be nice to people, keep your promises, your business will be much easier,” he once said.

Li has generally heeded his own advice. He is well known in Hong Kong for his diligence and relentless work schedule. “The most important enjoyment for me,” Li said, “is to work hard and make more profit.”

However, as his fame and fortune have grown, so has public resentment toward him. His unparalleled influence in Hong Kong has made him a target of the city’s toiling middle classes, who gripe that just about anywhere they spend their hard-earned wages, a percentage ends up in Li’s coffers.

Yet when Li first entered the business world, he was just like most of the territory’s Chinese–unknown and poor, with relatively few prospects. One scribe calls his rags-to-riches tale a “real-life fairy story.”

* * * *

Li was only one of many Chinese immigrants who were transforming the Hong Kong economy. The city became a rare safe haven for Chinese refugees fleeting chaos in China, especially after World War II, when the civil war between the nationalists and the Communists ravaged the country.

Hong Kong’s population was only 600,000 in 1945; five years later, it had surged to 2.5 million. Most were poor laborers and farmers; others rich businessmen, who feared for their lives as Mao’s Communists took control.

Both groups were instrumental in Hong Kong’s Miracle. The rich invested what capital and assets they could get out of China into new industrial enterprises. The poor became factory laborers. They called Hong Kong the “Adventurous Paradise.”

* * * *

In 1979,
HSBC
decided to sell its 22-percent stake Hutchison Whampoa, which, due to its shareholding structure, was a controlling stake. Hutchison was one of the old British trading houses, called hongs, that dominated the local economy. In the 1970s, Hutchison fell on hard times and required a rescue by the bank. After shoring up the hong’s finances, the bank wanted to find a new owner.

It turned to Li.

* * * *

Li’s acquisition of Hutchison was a seminal moment in Hong Kong’s economic history. He became the first Chinese to run a British hong, and he gained control of many of the businesses that would become mainstays of his empire, such as ports and retail chains.

The British elite in Hong Kong, who had always worked hard at keeping the commanding heights of Hong Kong’s economy in their own hands, were appalled at what the bank had wrought. Now, one of their city’s proudest establishments was under the thumb of a plastic flower salesman. The bank, however, was simply acknowledging reality.

Li’s ascendancy made clear the changing nature of the Hong Kong economy. The old British trading class was on its way out. The aggressive Chinese industrialists were the up-and-coming power. The Miracle and its impact could no longer be denied.